Revenue & Customs Brief 3 (2021): 'VAT liability of digital publications – update on litigation in News Corp and Ireland Ltd' provides an update on the VAT treatment of supplies of digital newspapers and other digital publications prior to 1 May 2020.

  • Supplies of newspapers have zero-rated for VAT since 1973. 
  • From 1 May 2020, as announced at Budget 2020, the Supply of certain e-publications has been zero-rated. 
    • Prior to this, it was HMRC's policy that zero-rating only applied to a supply of printed matter (goods) and not digital newspapers (services). 
  • News Corp UK & Ireland (News Corp) challenged this pre-May 2020 position.  
    • The Upper Tribunal (UT) found in favour of News Corp.  
    • This UT decision was overturned by the Court of Appeal (CoA) which found that electronic versions of newspapers supplied before 1 May 2020 should be standard rated for VAT, consistent with HMRC's policy.
  • News Corp has sought permission to appeal the CoA decision to the Supreme Court.

Businesses may wish to protect their position by making claims for overpaid VAT, based on the UT decision until such time as the News Corp litigation has concluded. 

Organisations that consider the UT decision applies to their supplies of digital publications should provide full details in writing to HMRC.

R&C Brief 3 (2021) makes it clear that HMRC's policy has not changed and so any claims made that rely on the UT findings will be rejected by HMRC decision. 

  • Businesses may Appeal this decision to protect their right to claim overpaid VAT, 
  • When the News Corp litigation has concluded, appeals will be considered. 
    • The 4-year time limit in s.80(4) of VATA 1994 will apply. 
    • Unjust enrichment will also be considered.

Useful guides on this topic

News Corp e-newspapers were standard rated for VAT
In HMRC v News Corp UK & Ireland Limited [2021] EWCA Civ 91, the Court of Appeal reversed the decision made by the Upper Tribunal (UT), finding that electronic versions of newspapers should be standard rated for VAT..

Books and Printed Matter
At Budget 2020 it was announced that from 1 December 2020 e-publications will be zero-rated. This measure was fast-tracked forward to a new commencement date of 1 May 2020 due to the Coronavirus lockdown.

Goods or services for VAT?
What are goods and what are services for VAT? The answer may have an impact on the time of supply, the place of supply and in some cases the rate of the supply. The answer is not always as straightforward as it may seem.

Appeals: VAT
The process of making a VAT appeal largely follows that of direct taxes, however, there are some differences.

Correcting VAT errors
What are the time limits? Can you do it through the VAT return? Do you have to notify HMRC?

External link

Revenue and Customs Brief 3 (2021): VAT liability of digital publications – update on litigation in News Corp and Ireland Ltd

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